International treaties regulate the relations between international persons or States under international law. The term “treaty” refers to an agreement, which is concluded between sovereign States in written form. It is a generic term used to cover a convention, agreement, arrangement, protocol or exchange of notes.

A treaty is initialed after negotiations and then signed. The heads of State, senior government officials and foreign affairs ministers are usually regarded as possessing “full powers” to sign a treaty as a representative of the State. By signing the treaty, the Contracting States are expected to initiate the procedures necessary under their domestic law to conclude a treaty, but there is no legally binding commitment to do so.

A treaty does not apply internationally until it is concluded. It enters into force after the Contracting States declare their consent through an exchange of instruments, or ratify, under their respective constitutional laws.

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Once the treaty has been ratified under its legal procedures the State cannot invoke the provisions of domestic law (i.e. municipal law) regarding its competence to give the consent, unless it was “objectively evident to any State conducting itself in the matter in accordance with normal practice and in good faith”.

Ratification differs from parliamentary consent. Whether parliamentary consent is necessary before ratification can take place is a matter for the domestic law of the State in question.

In the case of tax treaties, three dates are usually relevant for different purposes, as follows:

(i) The Date of Signature of the Treaty:

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This date is relevant for the “taxes covered” (Article 2), as the list of taxes to which the treaty applies in each State is settled at that date. A provision is usually inserted in that Article to the effect that the treaty will also apply to any identical or substantially similar taxes that are imposed by either State after the date of signature.

(ii) The Date when the Treaty Enters into Force:

This date binds the Contracting States. The date may be the date on which instruments of ratification are exchanged, although this is becoming less common in the case of tax treaties. If the domestic law of each State permits, a simpler procedure is now often used.

The treaty requires each State to notify the other Contracting State of the completion of the steps required under its own law to bring the treaty into force, and the treaty then enters into force a certain number of days after the later of the two notifications.

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(iii) The Date on which the Treaty “Has Effect” in Relation to Each of the Taxes to which it Applies:

It is important to distinguish this date (or these dates) from that on which the treaty enters into force. Because the tax year begins on different dates in different countries (and in some countries on different dates for different taxes), a tax treaty is usually expressed to have effect for the tax year beginning in the next calendar year after it enters into force.

If the domestic law of the Contracting State permits, there is nothing to prevent a tax treaty having effect from a date or dates earlier than that of entry into force.